CAIRO (Reuters) – Egypt‘s pound fell to a record low on Monday as the president signaled his government would allow it to depreciate slowly for several more days to stop a drain on foreign reserves that has driven the economy into crisis since the fall of Hosni Mubarak.

Hit by a new bout of political turmoil in the last month, the pound had weakened to a record low on Sunday at a new dollar auction brought in by the central bank. It fell further at a second auction on Monday, last trading at 6.37 to the dollar on the interbank market.

The drop means the central bank has allowed the pound to slide by almost 3 percent over the last two days after limiting its decline to only 6 percent since the uprising that removed Mubarak from power almost two years ago.

The pound’s fall, which is certain to increase the price of imported staples such as tea and sugar, underlines the economic crisis facing President Mohamed Mursi as his administration tries to contain the political fall-out of his move to fast-track a contentious new constitution passed into law last week.

Egyptians panicked by street clashes between Mursi’s Islamist backers and his more secular-minded opponents on the streets of Cairo and other cities have rushed to change their pounds into dollars in recent weeks, fearing it would be devalued further.

The pound’s fall “does not worry or scare us, and within days matters will balance out,” he said.

Having just sold their last dollar bills, dealers at one Cairo foreign exchange bureau did not bother changing their price board when the new low appeared on their trading screens.

“He took our last dollars,” said one of the traders, pointing to a man walking out of the door.

Outside, another man told a friend his dollar hunt had failed. “They have no dollars. What can I do?” he said by mobile phone. “I went to many dealers and could not find dollars.”

The fall has been driven mainly by ordinary citizens who have been trying to turn their savings into foreign currency, worried that the pound will weaken further because of the latest political turmoil.

The crisis wiped 10 percent off the value of Egyptian stocks when it erupted in late November. But the main index has mostly recovered since then, climbing in the two sessions since the introduction of the new foreign currency system.

Market participants attribute the rise to buying by Arab and international investors using the cheaper pound to bargain hunt.

FREE FLOATING POUND

The auctions are part of a shift announced on Saturday and designed to conserve foreign reserves, which the bank says are now at “critical” levels that cover just three months of the food, fuel and other goods Egypt imports.

Bankers have described the new system as a move towards establishing a free market value for the pound, which has been tightly controlled since a managed devaluation which ended in 2004.

The head of the Egyptian banking federation said the new system was an “important first step” towards a free float.

In remarks to MENA, Tarek Amer, who is also chairman of Egypt’s largest bank, state-owned National Bank of Egypt, said the new system was a success on its first day and had “significantly reduced” demand for dollars.

The central bank has sold about $ 75 million at each of Sunday’s and Monday’s auctions.

The run on the pound prompted officials last week to impose controls on how much cash could be physically carried out of the country. Security men at one Cairo bank branch had to remove one customer angered by a $ 10,000 limit on how much currency he could withdraw, witnesses said.

The changes announced on Saturday include regular foreign currency auctions and also limit how much foreign currency companies can withdraw at a time.

The central bank had spent more than $ 20 billion – or more than half of its reserves – over the past two years to defend the currency. The reserves fell by a further $ 448 million in November to about $ 15 billion.

Prices of imports have already started to rise. Pyramid Oil Field, a firm that imports chemicals for use in water treatment and oil fields, had put up its prices by 10 to 15 percent last week, fearing a further weakening of the pound.

“This instability obliges you to increase the price, to have a safety factor,” said Ashraf el-Gamal, president and managing director of the company, told Reuters. “From now on, the contracts will be of a very short validity.”

To be on the safe side, he was projecting that the pound would weaken to stand at 9 against the euro, compared to a previous level of 8.

ECONOMY FRAGILE

Prime Minister Hisham Kandil said on Sunday that the economy was in “a very difficult and fragile” situation, adding that he expected talks with the International Monetary Fund on a $ 4.8 billion loan to resume in January.

Egypt won preliminary approval in November from the IMF for the loan, but delayed seeking final approval until January after it suspended a series of tax increases to allow more time to explain a heavily criticized package of economic austerity measures to the public.

Kandil’s efforts to revive the economy have been hit by the latest turmoil, which scared off tourists who had begun to return. On the eve of the anti-Mubarak revolt, Egypt’s tourism industry accounted for one in eight jobs.

Mursi hoped that the passage of a new constitution would stabilize Egypt’s politics, giving him space to implement economic reforms and attract investment. The constitution, written by Mursi’s Islamist allies, was approved in a popular referendum in December.

But it remains the focus of controversy, and the opposition is likely to seize upon austerity measures demanded under an IMF deal as a stick to beat the Muslim Brotherhood ahead of a parliamentary vote expected in early 2013.

Two-fifths of Egypt’s 84 million population live around the poverty line and depend on subsidies that are straining the treasury.

Gamal of Pyramid Oil Field said he knew of at least three foreign companies that were hesitant to make large investments in the country because of the instability.

“They are feeling insecure because of everything that is happening,” he said. “One is looking to invest billions.”

NEW YORK (Reuters) - Stocks extended gains, with the Nasdaq up 1 percent on Monday on news that the majority of Senate Republicans are expected to support a tentative deal on the "fiscal cliff."

The market also got a lift from news that President Barack Obama will make a statement on the fiscal cliff at 1:30 p.m. EST at an event with "middle-class Americans," the White House said.

The Dow Jones industrial average was up 82.99 points, or 0.64 percent, at 13,021.10. The Standard & Poor's 500 Index was up 12.66 points, or 0.90 percent, at 1,415.09. The Nasdaq Composite Index was up 37.11 points, or 1.25 percent, at 2,997.43.

LAKE FOREST, Ill. (AP) — The Chicago Bears fired coach Lovie Smith on Monday after the team missed the playoffs for the fifth time in six seasons.

Smith was informed of the decision by general manager Phil Emery on the day after the Bears beat Detroit to finish 10-6 but still didn't make the playoffs.

Smith led the Bears to a Super Bowl, but also saw his team collapse in the second half of the past two seasons. Hired in 2004, Smith led the Bears to three division titles, two NFC title games and a 2007 Super Bowl appearance in his nine seasons. His record is 81-63, and he leaves with one year left on his contract.

The Bears scheduled a news conference Tuesday to discuss the move.

Even though Chicago closed with a win, the Bears needed a loss by Minnesota to get into the playoffs. The Vikings, though, beat Green Bay to clinch a postseason spot, leaving Chicago as the second team since the postseason expanded to 12 teams to miss out after a 7-1 start. The other was Washington in 1996.

Smith's record ranks third on the Bears' all-time list, behind George Halas and Mike Ditka.

The highlight of his tenure was the run to the title game that ended with a loss to the Indianapolis Colts. It was the first time two black coaches met for the championship, with Smith going against his mentor Tony Dungy.

The Bears made the playoffs just three times and posted three postseason victories under Smith. The 2010 team beat Seattle after the Seahawks won their division with a 7-9 record, but the Bears lost to Green Bay in the NFC title game at Soldier Field.

There was speculation Smith would be let go following the 2011 team's collapse, but he got one more year while general manager Jerry Angelo was fired.

Ultimately, the struggles on offense did him in.

Known for solid defenses, Smith oversaw a unit that was consistently effective and at times ranked among the league's best with stars such as Brian Urlacher, Lance Briggs and later Julius Peppers. Smith emphasized taking the ball away from the opposition, and no team did it more than the Bears with 310 during his tenure.

But on the other side, it was a different story.

Smith went through four offensive coordinators in Terry Shea, Ron Turner, Mike Martz and Mike Tice. He never could find the right formula, even as the Bears acquired stars such as quarterback Jay Cutler and receiver Brandon Marshall over the years.

The offensive line has struggled in a big way over the past few seasons after age took its toll on a group that was a strength during the 2005 and 2006 playoff seasons. The Bears were never able to replenish, spending first-round picks on Chris Williams (2008) and Gabe Carimi (2011) that did not pan out.

Williams had his contract terminated in October, ending a disappointing run, and Carimi struggled this season after missing most of his rookie year with a knee injury.

While Angelo took the fall after last season, Smith was not without blame in the personnel issues over the years. He pushed to bring in former Rams offensive lineman Orlando Pace and safety Adam Archuleta, players who succeeded in St. Louis when Smith was the defensive coordinator there but were busts with the Bears.

He had no bigger supporter than team matriarch Virginia McCaskey, but the fans seemed split on him. To some, he was a picture of calm, a coach who never lost his composure and never criticized his players in public, the anti-Ditka if you will.

History suggests fans who are clamoring for a high-profile replacement such as Bill Cowher or Jon Gruden might be disappointed. The last time the Bears went with an experienced NFL head coach was when Halas returned to the sideline in 1958.

They might, however, go with an offensive-minded coach for the first time since Mike Ditka was fired after the 1992 season, given the issues in that area.

That the Bears would be in this spot seemed unthinkable after they ripped Tennessee 51-20 on Nov. 4. They were sailing along at 7-1 and eyeing a big playoff run after collapsing the previous season, with the defense taking the ball away and scoring at an eye-opening rate to compensate for a struggling offense, but the schedule took a tougher turn.

They dropped back-to-back games to Houston and San Francisco and five of six in all before closing out with wins at Arizona and Detroit. Injuries mounted along the way, and what looked like a playoff run slipped from their grasp, just as it did after a promising start in 2011.

That year, they won seven of their first 10 only to wind up at 8-8 after a monumental collapse sparked by a season-ending injury to Cutler.

While Angelo was fired, Smith got spared and Emery took the job with a mandate to keep the coach at least one more year.

He quickly went to work retooling the roster, landing Marshall in a blockbuster trade with Miami that reunited Cutler with his favorite target in Denver.

He also added depth in other areas, bringing in Jason Campbell as the backup quarterback after Caleb Hanie failed the previous season and teaming running back Michael Bush in the backfield with Matt Forte.

All those moves sent expectations soaring. The results were awfully familiar, though.

Among the few virtual certainties of 2013 is the ongoing anguish of Syria and the decline of its president, Bashar al-Assad.

STORY HIGHLIGHTS

Look for more unrest amid power transitions in the Middle East

Disputes and economic worries will keep China, Japan, North Korea in the news

Europe's economy will stay on a rough road, but the outlook for it is brighter

Events are likely to draw attention to cyber warfare and climate change

(CNN) -- Forecasting the major international stories for the year ahead is a time-honored pastime, but the world has a habit of springing surprises. In late 1988, no one was predicting Tiananmen Square or the fall of the Berlin Wall. On the eve of 2001, the 9/11 attacks and the subsequent invasion of Afghanistan were unimaginable. So with that substantial disclaimer, let's peer into the misty looking glass for 2013.

More turmoil for Syria and its neighbors

If anything can be guaranteed, it is that Syria's gradual and brutal disintegration will continue, sending aftershocks far beyond its borders. Most analysts do not believe that President Bashar al-Assad can hang on for another year. The more capable units of the Syrian armed forces are overstretched; large tracts of north and eastern Syria are beyond the regime's control; the economy is in dire straits; and the war is getting closer to the heart of the capital with every passing week. Russian support for al-Assad, once insistent, is now lukewarm.

Amid the battle, a refugee crisis of epic proportions threatens to become a catastrophe as winter sets in. The United Nations refugee agency says more than 4 million Syrians are in desperate need, most of them in squalid camps on Syria's borders, where tents are no match for the cold and torrential rain. Inside Syria, diseases like tuberculosis are spreading, according to aid agencies, and there is a danger that hunger will become malnutrition in places like Aleppo.

The question is whether the conflict will culminate Tripoli-style, with Damascus overrun by rebel units; or whether a political solution can be found that involves al-Assad's departure and a broadly based transitional government taking his place. U.N. envoy Lakhdar Brahimi has not been explicit about al-Assad's exit as part of the transition, but during his most recent visit to Damascus, he hinted that it has to be.

2012: The year in pictures

HIDE CAPTION

<<

<

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

>

>>

"Syria and the Syrian people need, want and look forward to real change. And the meaning of this is clear to all," he said.

The international community still seems as far as ever from meaningful military intervention, even as limited as a no fly-zone. Nor is there any sign of concerted diplomacy to push all sides in Syria toward the sort of deal that ended the war in Bosnia. In those days, the United States and Russia were able to find common ground. In Syria, they have yet to do so, and regional actors such as Turkey, Qatar, Saudi Arabia and Iran also have irons in the fire.

Failing an unlikely breakthrough that would bring the regime and its opponents to a Syrian version of the Dayton Accords that ended the Bosnian war, the greatest risk is that a desperate regime may turn to its chemical weapons, troublesome friends (Hezbollah in Lebanon and the Kurdish PKK in Turkey) and seek to export unrest to Lebanon, Iraq and Jordan.

The Syrian regime has already hinted that it can retaliate against Turkey's support for the rebels -- not by lobbing Scud missiles into Turkey, but by playing the "Kurdish" card. That might involve direct support for the PKK or space for its Syrian ally, the Democratic Union Party. By some estimates, Syrians make up one-third of the PKK's fighting strength.

To the Turkish government, the idea that Syria's Kurds might carve out an autonomous zone and get cozy with Iraq's Kurds is a nightmare in the making. Nearly 800 people have been killed in Turkey since the PKK stepped up its attacks in mid-2011, but with three different sets of elections in Turkey in 2013, a historic bargain between Ankara and the Kurds that make up 18% of Turkey's population looks far from likely.

Many commentators expect Lebanon to become more volatile in 2013 because it duplicates so many of the dynamics at work in Syria. The assassination in October of Lebanese intelligence chief Brig. Gen. Wissam al-Hassan -- as he investigated a pro-Syrian politician accused of obtaining explosives from the Syrian regime -- was an ominous portent.

Victory for the overwhelmingly Sunni rebels in Syria would tilt the fragile sectarian balance next door, threatening confrontation between Lebanon's Sunnis and Hezbollah. The emergence of militant Salafist groups like al-Nusra in Syria is already playing into the hands of militants in Lebanon.

Iraq, too, is not immune from Syria's turmoil. Sunni tribes in Anbar and Ramadi provinces would be heartened should Assad be replaced by their brethren across the border. It would give them leverage in an ever more tense relationship with the Shia-dominated government in Baghdad. The poor health of one of the few conciliators in Iraqi politics, President Jalal Talabani, and renewed disputes between Iraq's Kurds and the government over boundaries in the oil-rich north, augur for a troublesome 2013 in Iraq.

More worries about Iran's nuclear program

Syria's predicament will probably feature throughout 2013, as will the behavior of its only friend in the region: Iran. Intelligence sources say Iran continues to supply the Assad regime with money, weapons and expertise; and military officers who defected from the Syrian army say Iranian technicians work in Syria's chemical weapons program. Al-Assad's continued viability is important for Iran, as his only Arab ally. They also share sponsorship of Hezbollah in Lebanon, which, with its vast supply of rockets and even some ballistic missiles, might be a valuable proxy in the event of an Israeli strike against Iran's nuclear program.

Speaking of which, there are likely to be several more episodes in the behind-closed-doors drama of negotiations on Iran's nuclear sites. Russia is trying to arrange the next round for January. But in public, at least, Iran maintains it has every right to continue enriching uranium for civilian purposes, such as helping in the treatment of more than 1 million Iranians with cancer.

Iran "will not suspend 20% uranium enrichment because of the demands of others," Fereydoun Abbasi-Davani, head of Iran's Atomic Energy Organization, said this month.

International experts say the amount of 20% enriched uranium (estimated by the International Atomic Energy Agency in November at 297 pounds) is more than needed for civilian purposes, and the installation of hundreds more centrifuges could cut the time needed to enrich uranium to weapons-grade. The question is whether Iran will agree to intrusive inspections that would reassure the international community -- and Israel specifically -- that it can't and won't develop a nuclear weapon.

This raises another question: Will it take bilateral U.S.-Iranian talks -- and the prospect of an end to the crippling sanctions regime -- to find a breakthrough? And will Iran's own presidential election in June change the equation?

For now, Israel appears to be prepared to give negotiation (and sanctions) time to bring Iran to the table. For now.

Egypt to deal with new power, economic troubles

Given the turmoil swirling through the Middle East, Israel could probably do without trying to bomb Iran's nuclear program into submission. Besides Syria and Lebanon, it is already grappling with a very different Egypt, where a once-jailed Islamist leader is now president and Salafist/jihadi groups, especially in undergoverned areas like Sinai, have a lease on life unimaginable in the Mubarak era.

The U.S. has an awkward relationship with President Mohamed Morsy, needing his help in mediating with Hamas in Gaza but concerned that his accumulation of power is fast weakening democracy and by his bouts of anti-Western rhetoric. (He has demanded the release from a U.S. jail of Sheikh Omar Abdel Rahman, convicted of involvement in the first bombing of the World Trade Center in 1993.)

The approval of the constitution removes one uncertainty, even if the opposition National Salvation Front says it cements Islamist power. But as much as the result, the turnout -- about one-third of eligible voters -- indicates that Egyptians are tired of turmoil, and more concerned about a deepening economic crisis.

Morsy imposed and then scrapped new taxes, and the long-expected $4.8 billion loan from the International Monetary Fund is still not agreed on. Egypt's foreign reserves were down to $15 billion by the end of the year, enough to cover less than three months of imports. Tourism revenues are one-third of what they were before street protests erupted early in 2011. Egypt's crisis in 2013 may be more about its economy than its politics.

Libya threatens to spawn more unrest in North Africa

Libya's revolution, if not as seismic as anything Syria may produce, is still reverberating far and wide. As Moammar Gadhafi's rule crumbled, his regime's weapons found their way into an arms bazaar, turning up in Mali and Sinai, even being intercepted off the Lebanese coast.

The Libyan government, such as it is, seems no closer to stamping its authority on the country, with Islamist brigades holding sway in the east, tribal unrest in the Sahara and militias engaged in turf wars. The danger is that Libya, a vast country where civic institutions were stifled for four decades, will become the incubator for a new generation of jihadists, able to spread their influence throughout the Sahel. They will have plenty of room and very little in the way of opposition from security forces.

The emergence of the Islamist group Ansar Dine in Mali is just one example. In this traditionally moderate Muslim country, Ansar's fighters and Tuareg rebels have ejected government forces from an area of northern Mali the size of Spain and begun implementing Sharia law, amputations and floggings included. Foreign fighters have begun arriving to join the latest front in global jihad; and terrorism analysts are seeing signs that al Qaeda in the Islamic Maghreb (AQIM) and groups like Boko Haram in Nigeria are beginning to work together.

There are plans for an international force to help Mali's depleted military take back the north, but one European envoy said it was unlikely to materialize before (wait for it) ... September 2013. Some terrorism analysts see North Africa as becoming the next destination of choice for international jihad, as brigades and camps sprout across a vast area of desert.

A bumpy troop transition for Afghanistan

The U.S. and its allies want to prevent Afghanistan from becoming another haven for terror groups. As the troop drawdown gathers pace, 2013 will be a critical year in standing up Afghan security forces (the numbers are there, their competence unproven), improving civil institutions and working toward a post-Karzai succession.

In November, the International Crisis Group said the outlook was far from assuring.

"Demonstrating at least will to ensure clean elections (in Afghanistan in 2014) could forge a degree of national consensus and boost popular confidence, but steps toward a stable transition must begin now to prevent a precipitous slide toward state collapse. Time is running out," the group said.

Critics have also voiced concerns that the publicly announced date of 2014 for withdrawing combat forces only lets the Taliban know how long they must hold out before taking on the Kabul government.

U.S. officials insist the word is "transitioning" rather than "withdrawal," but the shape and role of any military presence in 2014 and beyond are yet to be settled. Let's just say the United States continues to build up and integrate its special operations forces.

The other part of the puzzle is whether the 'good' Taliban can be coaxed into negotiations, and whether Pakistan, which has considerable influence over the Taliban leadership, will play honest broker.

Private meetings in Paris before Christmas that involved Taliban envoys and Afghan officials ended with positive vibes, with the Taliban suggesting they were open to working with other political groups and would not resist girls' education. There was also renewed discussion about opening a Taliban office in Qatar, but we've been here before. The Taliban are riven by internal dissent and may be talking the talk while allowing facts on the ground to work to their advantage.

Where will North Korea turn its focus?

On the subject of nuclear states that the U.S.-wishes-were-not, the succession in North Korea has provided no sign that the regime is ready to restrain its ambitious program to test nuclear devices and the means to deliver them.

Back in May 2012, Peter Brookes of the American Foreign Policy Council said that "North Korea is a wild card -- and a dangerous one at that." He predicted that the inexperienced Kim Jong Un would want to appear "large and in charge," for internal and external consumption. In December, Pyongyang launched a long-range ballistic missile -- one that South Korean scientists later said had the range to reach the U.S. West Coast. Unlike the failure of the previous missile launch in 2009, it managed to put a satellite into orbit.

The last two such launches have been followed by nuclear weapons tests -- in 2006 and 2009. Recent satellite images of the weapons test site analyzed by the group 38 North show continued activity there.

So the decision becomes a political one. Does Kim continue to appear "large and in charge" by ordering another test? Or have the extensive reshuffles and demotions of the past year already consolidated his position, allowing him to focus on the country's dire economic situation?

China-Japan island dispute to simmer

It's been a while since East Asia has thrown up multiple security challenges, but suddenly North Korea's missile and nuclear programs are not the only concern in the region. There's growing rancor between China and Japan over disputed islands in the East China Sea, which may be aggravated by the return to power in Japan of Shinzo Abe as prime minister.

Abe has long been concerned that Japan is vulnerable to China's growing power and its willingness to project that power. Throughout 2012, Japan and China were locked in a war of words over the Senkaku or Diaoyu islands, with fishing and Coast Guard boats deployed to support claims of sovereignty.

In the days before Japanese went to the polls, Beijing also sent a surveillance plane over the area, marking the first time since 1958, according to Japanese officials, that Bejing had intruded into "Japanese airspace." Japan scrambled F-15 jets in response.

The islands are uninhabited, but the seas around them may be rich in oil and gas. There is also a Falklands factor at play here. Not giving in to the other side is a matter of national pride. There's plenty of history between China and Japan -- not much of it good.

As China has built up its ability to project military power, Japan's navy has also expanded. Even a low-level incident could lead to an escalation. And as the islands are currently administered by Japan, the U.S. would have an obligation to help the Japanese defend them.

Few analysts expect conflict to erupt, and both sides have plenty to lose. For Japan, China is a critical market, but Japanese investment there has fallen sharply in the past year. Just one in a raft of problems for Abe. His prescription for dragging Japan out of its fourth recession since 2000 is a vast stimulus program to fund construction and other public works and a looser monetary policy.

The trouble is that Japan's debt is already about 240% of its GDP, a much higher ratio than even Greece. And Japan's banks hold a huge amount of that debt. Add a shrinking and aging population, and at some point the markets might decide that the yield on Japan's 10-year sovereign bond ought to be higher than the current 0.77%.

Economic uncertainty in U.S., growth in China

So the world's third-largest economy may not help much in reviving global growth, which in 2012 was an anemic 2.2%, according to United Nations data. The parts of Europe not mired in recession hover close to it, and growth in India and Brazil has weakened. Which leaves the U.S. and China.

At the time of writing, the White House and congressional leadership are still peering over the fiscal cliff. Should they lose their footing, the Congressional Budget Office expects the arbitrary spending cuts and tax increases to be triggered will push the economy into recession and send unemployment above 9%.

A stopgap measure, rather than a long-term foundation for reducing the federal deficit, looks politically more likely. But to companies looking for predictable economic policy, it may not be enough to unlock billions in investment. Why spend heavily if there's a recession around the corner, or if another fight looms over raising the federal debt ceiling?

In September, Moody's said it would downgrade the U.S. sovereign rating from its "AAA" rating without "specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term." In other words, it wants action beyond kicking the proverbial can.

Should the cliff be dodged, most forecasts see the U.S. economy expanding by about 2% in 2013. That's not enough to make up for stagnation elsewhere, so a great deal depends on China avoiding the proverbial hard landing.

Until now, Chinese growth has been powered by exports and infrastructure spending, but there are signs that China's maturing middle class is also becoming an economic force to be reckoned with. Consultants PwC expect retail sales in China to increase by 10.5% next year -- with China overtaking the U.S. as the world's largest retail market by 2016.

Europe's economic outlook a little better

No one expects Europe to become an economic powerhouse in 2013, but at least the horizon looks a little less dark than it did a year ago. The "PIGS' " (Portugal, Ireland/Italy, Greece, Spain) borrowing costs have eased; there is at least rhetorical progress toward a new economic and fiscal union; and the European Central Bank has talked tough on defending the Eurozone.

Mario Draghi, president of the European Central Bank, fended off the dragons with the declaration in July that "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."

Draghi has promised the bank has unlimited liquidity to buy sovereign debt, as long as governments (most likely Spain) submit to reforms designed to balance their budgets. But in 2013, the markets will want more than brave talk, including real progress toward banking and fiscal union that will leave behind what Draghi likes to call Europe's "fairy world" of unsustainable debt and collapsing banks. Nothing can be done without the say-so of German Chancellor Angela Merkel, renowned for a step-by-step approach that's likely to be even more cautious in a year when she faces re-election.

Elections in Italy in February may be more important -- pitching technocrat Prime Minister Mario Monti against the maverick he replaced, 76-year old Silvio Berlusconi. After the collapse of Berlusconi's coalition 13 months ago, Monti reined in spending, raised the retirement age and raised taxes to bring Italy back from the brink of insolvency. Now he will lead a coalition of centrist parties into the election. But polls suggest that Italians are tired of Monti's austerity program, and Berlusconi plans a populist campaign against the man he calls "Germano-centric."

The other tripwire in Europe may be Greece. More cuts in spending -- required to qualify for an EU/IMF bailout -- are likely to deepen an already savage recession, threatening more social unrest and the future of a fragile coalition. A 'Grexit' from the eurozone is still possible, and that's according to the Greek finance minister, Yannis Stournaras.

Expect to see more evidence of climate change

Hurricane Sandy, which struck the U.S. East Coast in November, was the latest indicator of changing and more severe weather patterns. Even if not repeated in 2013, extreme weather is beginning to have an effect -- on where people live, on politicians and on the insurance industry.

After Sandy, New York Gov. Andrew Cuomo said that after "the last few years, I don't think anyone can sit back anymore and say, 'Well, I'm shocked at that weather pattern.' " The storm of the century has become the storm of every decade or so, said Michael Oppenheimer, professor of geosciences at Princeton.

"Climate change will probably increase storm intensity and size simultaneously, resulting in a significant intensification of storm surges," he and colleagues wrote in Nature.

In the U.S., government exposure to storm-related losses in coastal states has risen more than 15-fold since 1990, to $885 billion in 2011, according to the Insurance Information Institute. The Munich RE insurance group says North America has seen higher losses from extreme weather than any other part of the world in recent decades.

"A main loss driver is the concentration of people and assets on the coast combined with high and possibly growing vulnerabilities," it says.

Risk Management Solutions, which models catastrophic risks, recently updated its scenarios, anticipating an increase of 40% in insurance losses on the Gulf Coast, Florida and the Southeast over the next five years, and 25% to 30% for the mid-Atlantic and Northeastern states. Those calculations were done before Sandy.

Inland, eyes will be trained on the heavens for signs of rain -- after the worst drought in 50 years across the Midwest. Climatologists say that extended periods of drought -- from the U.S. Midwest to Ukraine -- may be "the new normal." Jennifer Francis at the Institute of Marine and Coastal Sciences at Rutgers University has shown that a warmer Arctic tends to slow the jet stream, causing it to meander and, in turn, prolong weather patterns. It's called Arctic amplification, and it is probably aggravating drought in the Northwest United States and leading to warmer summers in the Northern Hemisphere, where 2012 was the hottest year on record.

It is a double-edged sword: Warmer temperatures may make it possible to begin cultivating in places like Siberia, but drier weather in traditional breadbaskets would be very disruptive. The U.N. Food and Agriculture Organization reports that stocks of key cereals have tightened, contributing to volatile world markets. Poor weather in Argentina, the world's second-largest exporter of corn, may compound the problem.

More cyber warfare

What will be the 2013 equivalents of Flame, Gauss and Shamoon? They were some of the most damaging computer viruses of 2012. The size and versatility of Flame was unlike nothing seen before, according to anti-virus firm Kaspersky Lab.

Gauss stole online banking information in the Middle East. Then came Shamoon, a virus that wiped the hard drives of about 30,000 computers at the Saudi oil company Aramco, making them useless. The Saudi government declared it an attack on the country's economy; debate continues on whether it was state-sponsored.

Kaspersky predicts that in 2013, we will see "new examples of cyber-warfare operations, increasing targeted attacks on businesses and new, sophisticated mobile threats."

Computer security firm McAfee also expects more malware to be developed to attack mobile devices and apps in 2013.

U.S. Defense Secretary Leon Panetta is more concerned about highly sophisticated attacks on infrastructure that "could be as destructive as the terrorist attack on 9/11."

"We know that foreign cyber actors are probing America's critical infrastructure networks. They are targeting the computer control systems that operate chemical, electricity and water plants and those that guide transportation throughout this country," he said in October.

Intellectual property can be stolen, bought or demanded as a quid pro quo for market access. The U.S. intelligence community believes China or Chinese interests are employing all three methods in an effort to close the technology gap.

In the waning days of 2012, the interagency Committee on Foreign Investment in the United States said "there is likely a coordinated strategy among one or more foreign governments or companies to acquire U.S. companies involved in research, development, or production of critical technologies."

It did not name the country in its unclassified report but separately noted a growing number of attempts by Chinese entities to buy U.S. companies.

Who will be soccer's next 'perfect machine'?

There's room for two less serious challenges in 2013. One is whether any football team, in Spain or beyond, can beat Barcelona and its inspirational goal machine Lionel Messi, who demolished a record that had stood since 1972 for the number of goals scored in a calendar year. (Before Glasgow Celtic fans start complaining, let's acknowledge their famous win against the Spanish champions in November.)

Despite the ill health of club coach Tito Vilanova, "Barca" sits imperiously at the top of La Liga in Spain and is the favorite to win the world's most prestigious club trophy, the European Champions League, in 2013. AC Milan is its next opponent in a match-up that pits two of Europe's most storied clubs against each other. But as Milan sporting director Umberto Gandini acknowledges, "We face a perfect machine."

Will Gangnam give it up to something sillier?

Finally, can something -- anything -- displace Gangnam Style as the most watched video in YouTube's short history? As of 2:16 p.m. ET on December 26, it had garnered 1,054,969,395 views and an even more alarming 6,351,871 "likes."

Perhaps in 2013 the YouTube audience will be entranced by squirrels playing table tennis, an octopus that spins plates or Cistercian nuns dancing the Macarena. Or maybe Gangnam will get to 2 billion with a duet with Justin Bieber.

In comic book publishing, the decision to kill off a long-running and beloved character may seem, at first glance, like a terribly unwise business move. But when Marvel Comics released its latest issue of Amazing Spider-Man—#700, which ends with Peter Parker, the webbed crusader’s alter ego, getting murdered—the issue began flying off the shelves.

“The sales are phenomenal,” says Axel Alonso, the editor in chief at Marvel Comics, “Amazing Spider-Man #700 has sold nearly 250,000 copies in print alone; final digital orders aren’t in yet. This is the best-selling comic book at this price-point of the last decade, at least.”Photograph Courtesy Marvel

Marvel isn’t the first comics company to lift sales by employing a shocking new creative direction. In fact, it’s actually a common practice, which gained attention in the 1970s but reached new heights in the early 1990s, when DC Comics destroyed its most famous character, Superman, in a publishing event that fueled sales across the world.

Here are four of the most surefire, lucrative, and reliably controversial methods that comic book creators use to gain readership and boost the bottom line.

I. Embrace alternative lifestyles

Gay characters are nothing new—an X-Men superhero called Northstar came out of the closet in 1992—but the subject is still controversial enough to cause a public outcry. The comic Life With Archie No. 16, which featured the first same-sex wedding in the series’ otherwise conservative history, hit newsstands in early 2012 and quickly became a target for One Million Moms, a conservative group that called for Toys R Us to stop selling the comic or be boycotted. The threat didn’t work. “[The Million Moms] really propelled the book,” says Archie Comics Chief Executive Jon Goldwater. “It was selling well anyway, but they made it a collector’s item. Last I heard it was selling on eBay for $ 50.” Dan Parent, a writer and illustrator who has worked for Archie for 20 years and penned the gay wedding issue, says he’d “love to send the Million Moms a big box of chocolates and flowers, to thank them for helping the Life With Archie book to sell out. It was a marketing dream.”

II. Court ethnicity

Marvel Comics unleashed an entirely new Spider-Man in August 2011. The costume was the same, but under it was a half-African American, half-Latino teenage boy named Miles Morales. Glenn Beck discussed the new biracial Spider-Man on his radio show. “The new Spider-Man looks just like president Obama,” he said. “I think a lot of this stuff is being done intentionally.” Stan Lee, the legendary comic book writer who co-created Spider-Man, dismisses the conspiracy theories. In fact, he says bringing a little ethnicity to comics is nothing new for his company. “Years ago at Marvel, in the 60s, we had a war book called Sgt. Fury and his Howling Commandos,” he says. “We introduced a black soldier, an Italian soldier, a Jewish soldier. We had every ethnic group represented in this platoon. And I was told, ‘Oh this book will never sell in the South.’ Or ‘it will never sell in the West.’ Or the North, or the East, or wherever the marketing department was worried somebody would be offended. But it was one of our best-selling books ever!”

III. Sex it up

Superheroes have always been synonymous with sex—their costumes aren’t skintight by accident—but in recent years, the characters have gotten far more steamy and intense. Several new titles released as part of DC Comics “New 52″ relaunch in 2011 included intimate scenes with over-the-top NSFW drawings. Catwoman #1, published in September 2011, gained attention for the eponymous character’s violent sex scene with Batman.

But sex in comics can come bearing consequences—as an issue of Dark Horse’s Buffy the Vampire Slayer series proved in February. Buffy, after discovering she’s pregnant, decides to get an abortion. “We wanted to court controversy,” admits Scott Allie, the editor in chief at Dark Horse Comics. “We were fed up with America’s glamorization of teenage pregnancy and wanted to do a story that explored the reasonable choice of terminating a pregnancy.” He says they anticipated the media headlines and even worked with their marketing department to encourage them, but “I don’t know that they really impact sales. Since it is a genuinely controversial issue, it probably costs us as many sales as it gets us.” In the end, Allie says, the issue sold well, but not in record numbers. “I think in order to do controversy in a way that would really boost sales, we’d have to try a little harder,” he says. “And that’s not a great reason to do it.”

IV. Kill your icons

Comic books have been killing off popular characters since the early 1970s, when Peter Parker’s girlfriend Gwen Stacy was murdered by the Green Goblin, which, at the time, was akin to superhero heresy. Since then, seemingly immortal characters like Superman, Robin the Boy Wonder, and Captain America have all been killed off at one time or another, usually followed by a tsunami-size media response and a comic-buying frenzy. “As far as what kind of controversy equates to biggest sales, it’s always been and always will be the death of a major character,” says Brandon Zuern, the store manager of Austin Books & Comics in Austin, Tex. “I think death in comics is way overused, but people keep buying them.” The best part of killing an iconic character is that the fans do most of the work for you. “The story kind of markets itself,” says Marvel Comics Editor in Chief Alonso. “You just get the word out, and people want to know more. ‘Peter Parker Death’ has been the No. 1 trending topic on Yahoo for the last two days, which speaks volumes about their love for Peter Parker.”

Businessweek.com — Top News

Title Post: Death! Sex! How Comic Books Bump Their SalesRating: 100%

based on 99998 ratings.5 user reviews.Author: Fluser SeoLinkThanks for visiting the blog, If any criticism and suggestions please leave a comment

BERLIN (Reuters) – Former German Finance Minister Peer Steinbrueck, who is running against Chancellor Angela Merkel in next year’s election, said austerity measures being imposed on struggling euro zone countries were too severe.

In an interview with the Frankfurter Allgemeine Sonntagszeitung (FAS), Steinbrueck said austerity measures were pushing some countries to do too much too soon. He said there would be massive protests in Germany if such a heavy dose of austerity were to be imposed so quickly.

“The savings measures are too severe, they’re leading to depression,” said Steinbrueck, 65, a Social Democrat (SPD) who was finance minister from 2005 to 2009 in Merkel’s right-centre grand coalition government.

“Some societies are being forced to their knees. Budget consolidation is in some ways like medicine. The right amount can save lives while too much can be lethal.”

Steinbrueck noted that some countries were being forced to make spending cuts that amounted to five percent of their gross domestic product (GDP).

“In Germany that would amount to 150 billion euros (of spending to be cut),” Steinbrueck said. “You can imagine what the protests would be like on German streets with that.”

Steinbrueck said he and the centre-left SPD were clearly in favor of efforts to stabilize the euro zone – due partly to German national interests and also due to Germany’s responsibility to the European Union.

“My advice to the SPD is that we shouldn’t treat the European issue in the election campaign as a minor topic or without being courageous,” Steinbrueck said, referring to fears in the SPD that talking about the euro zone rescue efforts would benefit Merkel more than the SPD.

“Europe has to be stabilized out of our national interests and out of our responsibility to Europe.”

WASHINGTON (Reuters) - Financial markets would be affected adversely if U.S. lawmakers fail to agree on a "fiscal cliff" deal before Tuesday, President Barack Obama said in an interview broadcast on Sunday, while urging Congress to act quickly to extend tax cuts for middle-class Americans.

Lawmakers are seeking a last-minute deal that would set aside $600 billion in tax increases and across-the-board government spending cuts that are set to start within days. If Congress does not make that happen, the first bill brought up in the new year would be to reduce taxes for middle-income families, Obama told NBC's "Meet the Press."

"Now I think that over the next 48 hours, my hope is that people recognize that, regardless of partisan differences, our top priority has to be to make sure that taxes on middle-class families do not go up. That would hurt our economy badly," Obama said in the interview taped on Saturday.

"We can get that done. Democrats and Republicans both say they don't want taxes to go up on middle-class families. That's something we all agree on. If we can get that done, that takes a big bite out of the 'fiscal cliff.' It avoids the worst outcomes," Obama added.

Low income tax rates first put in place under Republican former President George W. Bush are due to expire at the end of the day on Monday - the last day of 2012.

Obama said that failing to reach a deal would have a negative impact on financial markets.

"If people start seeing that on January 1st this problem still hasn't been solved, that we haven't seen the kind of deficit reduction that we could have had had the Republicans been willing to take the deal that I gave them ... then obviously that's going to have an adverse reaction in the markets," he said.

RARE SENATE SESSION ON SUNDAY

Obama met with congressional leaders at the White House on Friday and declared himself cautiously optimistic about the chances of an agreement, but he noted in the interview that nothing had materialized since then.

"I was modestly optimistic yesterday, but we don't yet see an agreement. And now the pressure's on Congress to produce," he said.

The Senate is scheduled to hold a rare Sunday session beginning at 1 p.m. EST (1800 GMT), but it was not clear whether the chamber would have fiscal-cliff legislation to act upon.

Obama sketched out what he believed to be the most likely scenarios the end the back-and-forth between both sides. Either the congressional leaders would come up with a deal, or Democrats in the Senate would bring a bill to the floor seeking an up-or-down vote to extend tax cuts for middle income earners.

"And if all else fails, if Republicans do in fact decide to block it, so that taxes on middle class families do in fact go up on January 1st, then we'll come back with a new Congress on January 4th and the first bill that will be introduced on the floor will be to cut taxes on middle class families," he said.

Obama chided Republicans for resisting his call for tax rates to go up for the top two percent of U.S. earners despite what he viewed as significant compromises on his part to cut spending and reform expensive social programs for the poor and elderly.

"They say that their biggest priority is making sure that we deal with the deficit in a serious way, but the way they're behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected. That seems to be their only overriding, unifying theme," Obama said.

"The offers that I've made to them have been so fair that a lot of Democrats get mad at me. I mean I offered to make some significant changes to our entitlement programs in order to reduce the deficit," he said.

TEMPE, Ariz. (AP) — Michigan State labored on offense throughout the first half, unable to get anything going on the ground, in the air, anywhere.

For a team that had lost five games by a combined 13 points during the regular season, it was starting to feel familiar.

The Spartans changed their luck by turning to brutally effective running back Le'Veon Bell in the second half, setting up Dan Conroy for another game-winning kick in a bowl game.

Bell ran for 145 yards and a fourth-quarter touchdown, Conroy kicked a 47-yard field goal with 1:01 left and Michigan State rallied to beat Texas Christian 17-16 in the Buffalo Wild Wings Bowl on Saturday night.

"With so many close games and losing like we did during the season, to have one go our way was definitely sweet," Conroy said.

It wasn't always pretty for the Spartans.

Michigan State (7-6) managed 76 yards of offense during the first two quarters as TCU bottled up Bell.

The 237-pound junior started to wear down the Horned Frogs in the second half, grinding out 107 of his yards on a 32-carry night.

Behind Bell, the Spartans went on the longest drive in their bowl history in the third quarter, marching 90 yards to set up freshman Connor Cook's 15-yard touchdown pass to Aaron Burbridge.

Michigan State then recovered a muffed punt by TCU's Skye Dawson at the 4-yard line midway through the fourth and Bell scored two plays later by racing around left end for a 14-13 lead.

TCU (7-6) still had a little life after blowing a 13-point halftime lead, moving just far enough to set up Jaden Oberkrom for the longest field goal in the bowl's history, a 53-yarder that put the Horned Frogs up 16-14 with 2:42 left.

They just left Michigan State too much time.

Starting at their own 25-yard line, the Spartans moved 45 yards in eight plays, setting up Conroy for his second game-winner in a bowl after beating Georgia with a 28-yarder in the third overtime of the 2012 Outback Bowl.

Michigan State's defense held after that, sending the Spartans to their second straight bowl win after three consecutive losses.

"There was no doubt in my mind that after so many losses in similar fashion that we were going to come out on top in this one," Spartans linebacker Max Bullough said.

The Horned Frogs shut down Michigan State's offense in the first half and did just enough when they had the ball to put together three scoring drives.

In the second half, TCU couldn't get anything going against the Spartans' defense — 84 total yards — and its defense gave up the long scoring drive in the third quarter, along with the game-winner in the fourth.

Trevone Boykin threw for 201 yards and an interception on 13-of-29 passing for the Horned Frogs.

"A little bit empty feeling inside because we felt like we left a lot on the field," TCU coach Gary Patterson said.

TCU and Michigan State came to the desert with an awful lot of similarities.

The Horned Frogs opened their first season in the Big 12 with four straight wins before losing four of their final six games. Michigan State started 4-2, then lost four of six down the stretch.

Michigan State had the nation's fourth-best defense and was 10th in scoring defense during the regular season. TCU was 18th in total defense and 10th against the run.

Michigan State quarterback Andrew Maxwell was up-and-down in his first season as Kirk Cousins' replacement, throwing 13 touchdown passes and nine interceptions. Boykin took over after four games for Casey Pachall, who was suspended and later left the team, and threw for 15 touchdowns and nine interceptions.

The biggest difference between the teams was Bell.

He ranked third nationally with 137.3 yards rushing per game and had 1,648 on the season, second-most in Michigan State history and 242 fewer than TCU had as a team.

Early on, the Horned Frogs gave him nowhere to go.

Filling holes inside and stringing plays out toward the sidelines, TCU stuffed the bruising Bell on nearly every touch, holding him to 38 yards on 11 carries in the first half.

Of course, it didn't seem to matter what Michigan State did. The Spartans had 29 yards on 12 plays in the first quarter and weren't a whole lot better in the second, with Maxwell throwing two near-interceptions on consecutive passes and an ill-advised trick play that probably should have resulted in a turnover, too.

The Spartans still seemed to be stuck in the ruts in the third quarter before grinding out a 14-play scoring drive led by Cook, who replaced Maxwell for the second time in the game. They had their biggest play on a floating pass from Bell to fullback TyQuan Hammock (29 yards), then Cook threw his first career touchdown pass, a 15-yarder to Burbridge on a crossing route that cut TCU's lead to 13-7.

"I thought Connor did a good job on the 90-yard drive, gave us a little momentum," Spartans coach Mark Dantonio said.

TCU didn't exactly have its way with Michigan State's defense in the first half and missed some chances to build a bigger lead.

The Frogs started gashing the Spartans for decent-sized chunks with their option midway through the first quarter, setting up Matthew Tucker's 4-yard touchdown on an end-around.

Boykin had an impressive off-the-back-foot throw to freshman Kolby Listenbee for 59 yards on the last play of the first quarter and nearly had a 19-yard touchdown pass to open the second, but LaDarius Brown was bumped and dropped the ball in the end zone. Oberkrom followed with a 47-yard field goal and added another from 31 yards after Boykin hit Josh Boyce on a 61-yard pass to put TCU up 13-0 at halftime.

The Frogs couldn't keep it up in the second half.

With Michigan State clogging the running lanes and chasing Boykin around, TCU had 30 yards of offense in the third quarter and continued to struggle in the fourth. The Horned Frogs did manage the short scoring drive to set up Oberkrom's late field goal, but ended up going backward on their final drive after Conroy's kick.

"What I thought happened in the third quarter was Michigan State dialed up the heat and we didn't have an answer," Patterson said.

Among the few virtual certainties of 2013 is the ongoing anguish of Syria and the decline of its president, Bashar al-Assad.

STORY HIGHLIGHTS

Look for more unrest amid power transitions in the Middle East

Disputes and economic worries will keep China, Japan, North Korea in the news

Europe's economy will stay on a rough road, but the outlook for it is brighter

Events are likely to draw attention to cyber warfare and climate change

(CNN) -- Forecasting the major international stories for the year ahead is a time-honored pastime, but the world has a habit of springing surprises. In late 1988, no one was predicting Tiananmen Square or the fall of the Berlin Wall. On the eve of 2001, the 9/11 attacks and the subsequent invasion of Afghanistan were unimaginable. So with that substantial disclaimer, let's peer into the misty looking glass for 2013.

More turmoil for Syria and its neighbors

If anything can be guaranteed, it is that Syria's gradual and brutal disintegration will continue, sending aftershocks far beyond its borders. Most analysts do not believe that President Bashar al-Assad can hang on for another year. The more capable units of the Syrian armed forces are overstretched; large tracts of north and eastern Syria are beyond the regime's control; the economy is in dire straits; and the war is getting closer to the heart of the capital with every passing week. Russian support for al-Assad, once insistent, is now lukewarm.

Amid the battle, a refugee crisis of epic proportions threatens to become a catastrophe as winter sets in. The United Nations refugee agency says more than 4 million Syrians are in desperate need, most of them in squalid camps on Syria's borders, where tents are no match for the cold and torrential rain. Inside Syria, diseases like tuberculosis are spreading, according to aid agencies, and there is a danger that hunger will become malnutrition in places like Aleppo.

The question is whether the conflict will culminate Tripoli-style, with Damascus overrun by rebel units; or whether a political solution can be found that involves al-Assad's departure and a broadly based transitional government taking his place. U.N. envoy Lakhdar Brahimi has not been explicit about al-Assad's exit as part of the transition, but during his most recent visit to Damascus, he hinted that it has to be.

2012: The year in pictures

HIDE CAPTION

<<

<

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

>

>>

"Syria and the Syrian people need, want and look forward to real change. And the meaning of this is clear to all," he said.

The international community still seems as far as ever from meaningful military intervention, even as limited as a no fly-zone. Nor is there any sign of concerted diplomacy to push all sides in Syria toward the sort of deal that ended the war in Bosnia. In those days, the United States and Russia were able to find common ground. In Syria, they have yet to do so, and regional actors such as Turkey, Qatar, Saudi Arabia and Iran also have irons in the fire.

Failing an unlikely breakthrough that would bring the regime and its opponents to a Syrian version of the Dayton Accords that ended the Bosnian war, the greatest risk is that a desperate regime may turn to its chemical weapons, troublesome friends (Hezbollah in Lebanon and the Kurdish PKK in Turkey) and seek to export unrest to Lebanon, Iraq and Jordan.

The Syrian regime has already hinted that it can retaliate against Turkey's support for the rebels -- not by lobbing Scud missiles into Turkey, but by playing the "Kurdish" card. That might involve direct support for the PKK or space for its Syrian ally, the Democratic Union Party. By some estimates, Syrians make up one-third of the PKK's fighting strength.

To the Turkish government, the idea that Syria's Kurds might carve out an autonomous zone and get cozy with Iraq's Kurds is a nightmare in the making. Nearly 800 people have been killed in Turkey since the PKK stepped up its attacks in mid-2011, but with three different sets of elections in Turkey in 2013, a historic bargain between Ankara and the Kurds that make up 18% of Turkey's population looks far from likely.

Many commentators expect Lebanon to become more volatile in 2013 because it duplicates so many of the dynamics at work in Syria. The assassination in October of Lebanese intelligence chief Brig. Gen. Wissam al-Hassan -- as he investigated a pro-Syrian politician accused of obtaining explosives from the Syrian regime -- was an ominous portent.

Victory for the overwhelmingly Sunni rebels in Syria would tilt the fragile sectarian balance next door, threatening confrontation between Lebanon's Sunnis and Hezbollah. The emergence of militant Salafist groups like al-Nusra in Syria is already playing into the hands of militants in Lebanon.

Iraq, too, is not immune from Syria's turmoil. Sunni tribes in Anbar and Ramadi provinces would be heartened should Assad be replaced by their brethren across the border. It would give them leverage in an ever more tense relationship with the Shia-dominated government in Baghdad. The poor health of one of the few conciliators in Iraqi politics, President Jalal Talabani, and renewed disputes between Iraq's Kurds and the government over boundaries in the oil-rich north, augur for a troublesome 2013 in Iraq.

More worries about Iran's nuclear program

Syria's predicament will probably feature throughout 2013, as will the behavior of its only friend in the region: Iran. Intelligence sources say Iran continues to supply the Assad regime with money, weapons and expertise; and military officers who defected from the Syrian army say Iranian technicians work in Syria's chemical weapons program. Al-Assad's continued viability is important for Iran, as his only Arab ally. They also share sponsorship of Hezbollah in Lebanon, which, with its vast supply of rockets and even some ballistic missiles, might be a valuable proxy in the event of an Israeli strike against Iran's nuclear program.

Speaking of which, there are likely to be several more episodes in the behind-closed-doors drama of negotiations on Iran's nuclear sites. Russia is trying to arrange the next round for January. But in public, at least, Iran maintains it has every right to continue enriching uranium for civilian purposes, such as helping in the treatment of more than 1 million Iranians with cancer.

Iran "will not suspend 20% uranium enrichment because of the demands of others," Fereydoun Abbasi-Davani, head of Iran's Atomic Energy Organization, said this month.

International experts say the amount of 20% enriched uranium (estimated by the International Atomic Energy Agency in November at 297 pounds) is more than needed for civilian purposes, and the installation of hundreds more centrifuges could cut the time needed to enrich uranium to weapons-grade. The question is whether Iran will agree to intrusive inspections that would reassure the international community -- and Israel specifically -- that it can't and won't develop a nuclear weapon.

This raises another question: Will it take bilateral U.S.-Iranian talks -- and the prospect of an end to the crippling sanctions regime -- to find a breakthrough? And will Iran's own presidential election in June change the equation?

For now, Israel appears to be prepared to give negotiation (and sanctions) time to bring Iran to the table. For now.

Egypt to deal with new power, economic troubles

Given the turmoil swirling through the Middle East, Israel could probably do without trying to bomb Iran's nuclear program into submission. Besides Syria and Lebanon, it is already grappling with a very different Egypt, where a once-jailed Islamist leader is now president and Salafist/jihadi groups, especially in undergoverned areas like Sinai, have a lease on life unimaginable in the Mubarak era.

The U.S. has an awkward relationship with President Mohamed Morsy, needing his help in mediating with Hamas in Gaza but concerned that his accumulation of power is fast weakening democracy and by his bouts of anti-Western rhetoric. (He has demanded the release from a U.S. jail of Sheikh Omar Abdel Rahman, convicted of involvement in the first bombing of the World Trade Center in 1993.)

The approval of the constitution removes one uncertainty, even if the opposition National Salvation Front says it cements Islamist power. But as much as the result, the turnout -- about one-third of eligible voters -- indicates that Egyptians are tired of turmoil, and more concerned about a deepening economic crisis.

Morsy imposed and then scrapped new taxes, and the long-expected $4.8 billion loan from the International Monetary Fund is still not agreed on. Egypt's foreign reserves were down to $15 billion by the end of the year, enough to cover less than three months of imports. Tourism revenues are one-third of what they were before street protests erupted early in 2011. Egypt's crisis in 2013 may be more about its economy than its politics.

Libya threatens to spawn more unrest in North Africa

Libya's revolution, if not as seismic as anything Syria may produce, is still reverberating far and wide. As Moammar Gadhafi's rule crumbled, his regime's weapons found their way into an arms bazaar, turning up in Mali and Sinai, even being intercepted off the Lebanese coast.

The Libyan government, such as it is, seems no closer to stamping its authority on the country, with Islamist brigades holding sway in the east, tribal unrest in the Sahara and militias engaged in turf wars. The danger is that Libya, a vast country where civic institutions were stifled for four decades, will become the incubator for a new generation of jihadists, able to spread their influence throughout the Sahel. They will have plenty of room and very little in the way of opposition from security forces.

The emergence of the Islamist group Ansar Dine in Mali is just one example. In this traditionally moderate Muslim country, Ansar's fighters and Tuareg rebels have ejected government forces from an area of northern Mali the size of Spain and begun implementing Sharia law, amputations and floggings included. Foreign fighters have begun arriving to join the latest front in global jihad; and terrorism analysts are seeing signs that al Qaeda in the Islamic Maghreb (AQIM) and groups like Boko Haram in Nigeria are beginning to work together.

There are plans for an international force to help Mali's depleted military take back the north, but one European envoy said it was unlikely to materialize before (wait for it) ... September 2013. Some terrorism analysts see North Africa as becoming the next destination of choice for international jihad, as brigades and camps sprout across a vast area of desert.

A bumpy troop transition for Afghanistan

The U.S. and its allies want to prevent Afghanistan from becoming another haven for terror groups. As the troop drawdown gathers pace, 2013 will be a critical year in standing up Afghan security forces (the numbers are there, their competence unproven), improving civil institutions and working toward a post-Karzai succession.

In November, the International Crisis Group said the outlook was far from assuring.

"Demonstrating at least will to ensure clean elections (in Afghanistan in 2014) could forge a degree of national consensus and boost popular confidence, but steps toward a stable transition must begin now to prevent a precipitous slide toward state collapse. Time is running out," the group said.

Critics have also voiced concerns that the publicly announced date of 2014 for withdrawing combat forces only lets the Taliban know how long they must hold out before taking on the Kabul government.

U.S. officials insist the word is "transitioning" rather than "withdrawal," but the shape and role of any military presence in 2014 and beyond are yet to be settled. Let's just say the United States continues to build up and integrate its special operations forces.

The other part of the puzzle is whether the 'good' Taliban can be coaxed into negotiations, and whether Pakistan, which has considerable influence over the Taliban leadership, will play honest broker.

Private meetings in Paris before Christmas that involved Taliban envoys and Afghan officials ended with positive vibes, with the Taliban suggesting they were open to working with other political groups and would not resist girls' education. There was also renewed discussion about opening a Taliban office in Qatar, but we've been here before. The Taliban are riven by internal dissent and may be talking the talk while allowing facts on the ground to work to their advantage.

Where will North Korea turn its focus?

On the subject of nuclear states that the U.S.-wishes-were-not, the succession in North Korea has provided no sign that the regime is ready to restrain its ambitious program to test nuclear devices and the means to deliver them.

Back in May 2012, Peter Brookes of the American Foreign Policy Council said that "North Korea is a wild card -- and a dangerous one at that." He predicted that the inexperienced Kim Jong Un would want to appear "large and in charge," for internal and external consumption. In December, Pyongyang launched a long-range ballistic missile -- one that South Korean scientists later said had the range to reach the U.S. West Coast. Unlike the failure of the previous missile launch in 2009, it managed to put a satellite into orbit.

The last two such launches have been followed by nuclear weapons tests -- in 2006 and 2009. Recent satellite images of the weapons test site analyzed by the group 38 North show continued activity there.

So the decision becomes a political one. Does Kim continue to appear "large and in charge" by ordering another test? Or have the extensive reshuffles and demotions of the past year already consolidated his position, allowing him to focus on the country's dire economic situation?

China-Japan island dispute to simmer

It's been a while since East Asia has thrown up multiple security challenges, but suddenly North Korea's missile and nuclear programs are not the only concern in the region. There's growing rancor between China and Japan over disputed islands in the East China Sea, which may be aggravated by the return to power in Japan of Shinzo Abe as prime minister.

Abe has long been concerned that Japan is vulnerable to China's growing power and its willingness to project that power. Throughout 2012, Japan and China were locked in a war of words over the Senkaku or Diaoyu islands, with fishing and Coast Guard boats deployed to support claims of sovereignty.

In the days before Japanese went to the polls, Beijing also sent a surveillance plane over the area, marking the first time since 1958, according to Japanese officials, that Bejing had intruded into "Japanese airspace." Japan scrambled F-15 jets in response.

The islands are uninhabited, but the seas around them may be rich in oil and gas. There is also a Falklands factor at play here. Not giving in to the other side is a matter of national pride. There's plenty of history between China and Japan -- not much of it good.

As China has built up its ability to project military power, Japan's navy has also expanded. Even a low-level incident could lead to an escalation. And as the islands are currently administered by Japan, the U.S. would have an obligation to help the Japanese defend them.

Few analysts expect conflict to erupt, and both sides have plenty to lose. For Japan, China is a critical market, but Japanese investment there has fallen sharply in the past year. Just one in a raft of problems for Abe. His prescription for dragging Japan out of its fourth recession since 2000 is a vast stimulus program to fund construction and other public works and a looser monetary policy.

The trouble is that Japan's debt is already about 240% of its GDP, a much higher ratio than even Greece. And Japan's banks hold a huge amount of that debt. Add a shrinking and aging population, and at some point the markets might decide that the yield on Japan's 10-year sovereign bond ought to be higher than the current 0.77%.

Economic uncertainty in U.S., growth in China

So the world's third-largest economy may not help much in reviving global growth, which in 2012 was an anemic 2.2%, according to United Nations data. The parts of Europe not mired in recession hover close to it, and growth in India and Brazil has weakened. Which leaves the U.S. and China.

At the time of writing, the White House and congressional leadership are still peering over the fiscal cliff. Should they lose their footing, the Congressional Budget Office expects the arbitrary spending cuts and tax increases to be triggered will push the economy into recession and send unemployment above 9%.

A stopgap measure, rather than a long-term foundation for reducing the federal deficit, looks politically more likely. But to companies looking for predictable economic policy, it may not be enough to unlock billions in investment. Why spend heavily if there's a recession around the corner, or if another fight looms over raising the federal debt ceiling?

In September, Moody's said it would downgrade the U.S. sovereign rating from its "AAA" rating without "specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term." In other words, it wants action beyond kicking the proverbial can.

Should the cliff be dodged, most forecasts see the U.S. economy expanding by about 2% in 2013. That's not enough to make up for stagnation elsewhere, so a great deal depends on China avoiding the proverbial hard landing.

Until now, Chinese growth has been powered by exports and infrastructure spending, but there are signs that China's maturing middle class is also becoming an economic force to be reckoned with. Consultants PwC expect retail sales in China to increase by 10.5% next year -- with China overtaking the U.S. as the world's largest retail market by 2016.

Europe's economic outlook a little better

No one expects Europe to become an economic powerhouse in 2013, but at least the horizon looks a little less dark than it did a year ago. The "PIGS' " (Portugal, Ireland/Italy, Greece, Spain) borrowing costs have eased; there is at least rhetorical progress toward a new economic and fiscal union; and the European Central Bank has talked tough on defending the Eurozone.

Mario Draghi, president of the European Central Bank, fended off the dragons with the declaration in July that "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."

Draghi has promised the bank has unlimited liquidity to buy sovereign debt, as long as governments (most likely Spain) submit to reforms designed to balance their budgets. But in 2013, the markets will want more than brave talk, including real progress toward banking and fiscal union that will leave behind what Draghi likes to call Europe's "fairy world" of unsustainable debt and collapsing banks. Nothing can be done without the say-so of German Chancellor Angela Merkel, renowned for a step-by-step approach that's likely to be even more cautious in a year when she faces re-election.

Elections in Italy in February may be more important -- pitching technocrat Prime Minister Mario Monti against the maverick he replaced, 76-year old Silvio Berlusconi. After the collapse of Berlusconi's coalition 13 months ago, Monti reined in spending, raised the retirement age and raised taxes to bring Italy back from the brink of insolvency. Now he will lead a coalition of centrist parties into the election. But polls suggest that Italians are tired of Monti's austerity program, and Berlusconi plans a populist campaign against the man he calls "Germano-centric."

The other tripwire in Europe may be Greece. More cuts in spending -- required to qualify for an EU/IMF bailout -- are likely to deepen an already savage recession, threatening more social unrest and the future of a fragile coalition. A 'Grexit' from the eurozone is still possible, and that's according to the Greek finance minister, Yannis Stournaras.

Expect to see more evidence of climate change

Hurricane Sandy, which struck the U.S. East Coast in November, was the latest indicator of changing and more severe weather patterns. Even if not repeated in 2013, extreme weather is beginning to have an effect -- on where people live, on politicians and on the insurance industry.

After Sandy, New York Gov. Andrew Cuomo said that after "the last few years, I don't think anyone can sit back anymore and say, 'Well, I'm shocked at that weather pattern.' " The storm of the century has become the storm of every decade or so, said Michael Oppenheimer, professor of geosciences at Princeton.

"Climate change will probably increase storm intensity and size simultaneously, resulting in a significant intensification of storm surges," he and colleagues wrote in Nature.

In the U.S., government exposure to storm-related losses in coastal states has risen more than 15-fold since 1990, to $885 billion in 2011, according to the Insurance Information Institute. The Munich RE insurance group says North America has seen higher losses from extreme weather than any other part of the world in recent decades.

"A main loss driver is the concentration of people and assets on the coast combined with high and possibly growing vulnerabilities," it says.

Risk Management Solutions, which models catastrophic risks, recently updated its scenarios, anticipating an increase of 40% in insurance losses on the Gulf Coast, Florida and the Southeast over the next five years, and 25% to 30% for the mid-Atlantic and Northeastern states. Those calculations were done before Sandy.

Inland, eyes will be trained on the heavens for signs of rain -- after the worst drought in 50 years across the Midwest. Climatologists say that extended periods of drought -- from the U.S. Midwest to Ukraine -- may be "the new normal." Jennifer Francis at the Institute of Marine and Coastal Sciences at Rutgers University has shown that a warmer Arctic tends to slow the jet stream, causing it to meander and, in turn, prolong weather patterns. It's called Arctic amplification, and it is probably aggravating drought in the Northwest United States and leading to warmer summers in the Northern Hemisphere, where 2012 was the hottest year on record.

It is a double-edged sword: Warmer temperatures may make it possible to begin cultivating in places like Siberia, but drier weather in traditional breadbaskets would be very disruptive. The U.N. Food and Agriculture Organization reports that stocks of key cereals have tightened, contributing to volatile world markets. Poor weather in Argentina, the world's second-largest exporter of corn, may compound the problem.

More cyber warfare

What will be the 2013 equivalents of Flame, Gauss and Shamoon? They were some of the most damaging computer viruses of 2012. The size and versatility of Flame was unlike nothing seen before, according to anti-virus firm Kaspersky Lab.

Gauss stole online banking information in the Middle East. Then came Shamoon, a virus that wiped the hard drives of about 30,000 computers at the Saudi oil company Aramco, making them useless. The Saudi government declared it an attack on the country's economy; debate continues on whether it was state-sponsored.

Kaspersky predicts that in 2013, we will see "new examples of cyber-warfare operations, increasing targeted attacks on businesses and new, sophisticated mobile threats."

Computer security firm McAfee also expects more malware to be developed to attack mobile devices and apps in 2013.

U.S. Defense Secretary Leon Panetta is more concerned about highly sophisticated attacks on infrastructure that "could be as destructive as the terrorist attack on 9/11."

"We know that foreign cyber actors are probing America's critical infrastructure networks. They are targeting the computer control systems that operate chemical, electricity and water plants and those that guide transportation throughout this country," he said in October.

Intellectual property can be stolen, bought or demanded as a quid pro quo for market access. The U.S. intelligence community believes China or Chinese interests are employing all three methods in an effort to close the technology gap.

In the waning days of 2012, the interagency Committee on Foreign Investment in the United States said "there is likely a coordinated strategy among one or more foreign governments or companies to acquire U.S. companies involved in research, development, or production of critical technologies."

It did not name the country in its unclassified report but separately noted a growing number of attempts by Chinese entities to buy U.S. companies.

Who will be soccer's next 'perfect machine'?

There's room for two less serious challenges in 2013. One is whether any football team, in Spain or beyond, can beat Barcelona and its inspirational goal machine Lionel Messi, who demolished a record that had stood since 1972 for the number of goals scored in a calendar year. (Before Glasgow Celtic fans start complaining, let's acknowledge their famous win against the Spanish champions in November.)

Despite the ill health of club coach Tito Vilanova, "Barca" sits imperiously at the top of La Liga in Spain and is the favorite to win the world's most prestigious club trophy, the European Champions League, in 2013. AC Milan is its next opponent in a match-up that pits two of Europe's most storied clubs against each other. But as Milan sporting director Umberto Gandini acknowledges, "We face a perfect machine."

Will Gangnam give it up to something sillier?

Finally, can something -- anything -- displace Gangnam Style as the most watched video in YouTube's short history? As of 2:16 p.m. ET on December 26, it had garnered 1,054,969,395 views and an even more alarming 6,351,871 "likes."

Perhaps in 2013 the YouTube audience will be entranced by squirrels playing table tennis, an octopus that spins plates or Cistercian nuns dancing the Macarena. Or maybe Gangnam will get to 2 billion with a duet with Justin Bieber.